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SEC proposes ending federal shareholder proposal rule

SEC proposes ending federal shareholder proposal rule

Rule Changes

Agency would leave proxy voting rules to state corporate law

September 16th, 2026: SEC proposes rescinding Rule 14a-8

Overview

Updated Sep 21

For 84 years, the Securities and Exchange Commission (SEC) has let shareholders of public companies put their own proposals on corporate proxy ballots. On September 16, the agency proposed abolishing that rule; the plan was published in the Federal Register on September 21, opening a 60-day comment period that runs through November 20.

The change is championed by SEC Chairman Paul Atkins. It would hand shareholder proposal rights to state corporate law and eliminate the glossy annual reports companies mail to investors. Cooley and Davis Polk expect Rule 14a-8 to stay in effect through the 2027 proxy season and predict litigation if the SEC finalizes the rescission.

Why it matters

If finalized, 84 years of federal shareholder proposal rights give way to state-by-state rules — a shift of power toward corporate management.

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Key Indicators

84
Years Rule 14a-8 has governed shareholder proposals
Adopted in 1942, the rule lets eligible shareholders include proposals in company proxy materials unless grounds for exclusion apply.
60
Public comment period
Comments are open for 60 days after the proposals appeared in the Federal Register on September 21. The deadline is November 20, 2026.
3
Republican SEC commissioners
The commission holds three Republican seats and two vacant Democratic-held seats, easing the path to a final vote.
Nov 20
Comment deadline
Deadline for public comments on the rescission proposal.

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People Involved

Paul S. Atkins
Paul S. Atkins
SEC Chairman
Leading the proposal to rescind Rule 14a-8
 Hester M. Peirce
Hester M. Peirce
SEC Commissioner
Supports the proposal
GD
Glenn Davis
Executive Director, Council of Institutional Investors
Opposes the proposal

Organizations Involved

U.S. Securities and Exchange Commission
U.S. Securities and Exchange Commission
Federal regulator
Proposing to rescind Rule 14a-8 and modernize proxy solicitations

The SEC regulates U.S. securities markets and enforces the federal proxy rules under the Securities Exchange Act of 1934.
Council of Institutional Investors
Council of Institutional Investors
Investor advocacy nonprofit
Opposes the rescission

A nonprofit representing pension funds and other institutional investors with trillions in assets under management.

Timeline

1942 September 2026

2 events Latest: September 16th, 2026 · 2 months ago

  1. SEC proposes rescinding Rule 14a-8

    Latest Regulation

    The commission proposes ending the federal shareholder proposal rule, amending discretionary proxy authority, and eliminating separate glossy annual reports. Comments are open for 60 days.

  2. SEC adopts Rule 14a-8

    Regulation

    The SEC establishes a federal mechanism letting eligible shareholders include their own proposals in company proxy materials.

Scenarios

1

SEC finalizes Rule 14a-8 rescission

Likely Resolves by End of 2027

Discussed by: Reuters, Bloomberg

With a Republican majority on the commission and two vacant Democratic-held seats, the proposal is well positioned to clear a final vote. The full rulemaking process typically runs 12 to 18 months after the comment period closes. States like Texas, which already court incorporations with favorable laws, would become the arbiters of shareholder proposal rights.

2

SEC preserves a federal shareholder proposal mechanism

Possible Resolves by End of 2027

Discussed by: Council of Institutional Investors, ESG Today, investor advocacy groups

Investor and governance groups plan to push back during the 60-day comment period, arguing the rule lets shareholders flag concerns about executive pay, climate, and board independence. Sustained opposition, a change in the commission's makeup, or a Congressional Review Act challenge could force the SEC to scale back the proposal rather than fully rescind the rule.

3

Court blocks the rescission

Possible Resolves by End of 2028

Discussed by: Law.com, National Law Journal, legal analysts

If the SEC finalizes the rescission, investor groups could challenge it in federal court under the Administrative Procedure Act, arguing the agency's justification is arbitrary and capricious. The Business Roundtable v. SEC case in 2011 showed courts will scrutinize agency changes to proxy rules. A court could vacate or remand the rule, delaying or killing it.

4

2027 proxy season becomes a 'last chance' battleground

Likely Resolves by Q2 2027

Discussed by: Davis Polk, Cooley, Gibson Dunn

With Rule 14a-8 still in effect for the 2027 season, shareholder proponents may file more aggressively, treating it as a possible last opportunity. The SEC staff has already stopped issuing no-action letters on proposal exclusions, removing a tool companies used to keep proposals off ballots.

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

August 2010 – September 2011

Proxy Access Rule withdrawal (2010-2011)

The SEC adopted Rule 14a-11, letting shareholders nominate directors on company ballots. The Business Roundtable and the U.S. Chamber of Commerce sued, arguing the rule was arbitrary and capricious.

Then

The SEC declined to defend the rule and withdrew it in September 2011, sidestepping a court defeat.

Now

Set a precedent that SEC rulemaking on shareholder rights can be undone by litigation pressure.

Why this matters now

Shows courts can check aggressive SEC changes to proxy rules — a lever investor groups may pull again if the rescission is finalized.

September 2020 – June 2021

Rule 14a-8 threshold amendments (2020-2021)

The SEC amended Rule 14a-8 to raise the ownership thresholds for submitting proposals, from $2,000 held for one year to $2,000 held for three years, $15,000 held for two years, or $25,000 held for one year. The next administration suspended the changes while it reconsidered them.

Then

The stricter thresholds never took effect as the SEC paused implementation.

Now

Demonstrated how each administration's priorities reset the federal shareholder proposal regime.

Why this matters now

Shows the shareholder proposal rule has been a political football, with each SEC majority shifting eligibility rules before the current proposal to eliminate the rule outright.

June 1982

Edgar v. MITE and state takeover laws (1982)

The Supreme Court struck down Illinois's takeover law as an unconstitutional burden on interstate commerce, but explicitly left room for states to regulate corporate governance. States responded by re-enacting takeover statutes tailored differently.

Then

A wave of state antitakeover laws followed, each designed to favor local incorporations.

Now

Delaware consolidated its dominance as the incorporation hub, and state competition over corporate law became permanent.

Why this matters now

Frames the current debate over whether state corporate law, not federal proxy rules, should set shareholder rights — and whether states will compete to attract incorporations with lighter rules.

Sources

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SEC.gov Reuters Bloomberg Law.com / National Law Journal ESG Today Corporate and Securities Law (Dodd-Frank.com) Briefs.co The Governance Beat (Cooley) LexBlog Federal Register GovInfo Gibson Dunn Cooley Davis Polk BCLP Responsible Investor